Raytheon Company awarded $234M for PATRIOT PBL Requirement, a sole-source contract with a long performance period

Contract Overview

Contract Amount: $234,193,298 ($234.2M)

Contractor: Raytheon Company

Awarding Agency: Department of Defense

Start Date: 2019-01-01

End Date: 2026-07-31

Contract Duration: 2,768 days

Daily Burn Rate: $84.6K/day

Competition Type: NOT COMPETED

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: PATRIOT PBL REQUIREMENT

Place of Performance

Location: FORT BLISS, EL PASO County, TEXAS, 79916

State: Texas Government Spending

Plain-Language Summary

Department of Defense obligated $234.2 million to RAYTHEON COMPANY for work described as: PATRIOT PBL REQUIREMENT Key points: 1. Contract value is substantial, indicating a significant long-term commitment for critical defense systems. 2. Sole-source award suggests limited market alternatives or specific contractor capabilities. 3. Long performance duration (over 6 years) may present risks related to technological obsolescence or changing requirements. 4. Favorable contract type (Firm Fixed Price) shifts cost risk to the contractor. 5. Contract is a delivery order under a larger indefinite-delivery/indefinite-quantity (IDIQ) contract, common for sustainment. 6. Geographic location of performance is Texas, potentially impacting regional economic activity and workforce.

Value Assessment

Rating: fair

Benchmarking the value of this contract is challenging without knowing the specific components and services included in the PATRIOT PBL Requirement. However, the total award of over $234 million for a period spanning nearly seven years suggests a significant investment. The firm fixed-price nature is generally favorable for the government, as it caps potential cost overruns. Without comparable sole-source contracts for similar complex defense systems, a precise value-for-money assessment is difficult, but the duration and scope imply a substantial, albeit potentially necessary, expenditure.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning it was not competed among multiple vendors. This typically occurs when a single contractor possesses unique capabilities, proprietary technology, or is the sole authorized provider of a specific system or service. The lack of competition means the government did not benefit from price discovery through a bidding process, which could potentially lead to higher prices than if multiple vendors had competed.

Taxpayer Impact: Taxpayers may be paying a premium due to the absence of competitive pressure. The government's ability to negotiate the best possible price is diminished in sole-source situations.

Public Impact

The primary beneficiaries are the U.S. Army and potentially allied nations utilizing the PATRIOT missile defense system. Services delivered likely include sustainment, maintenance, repair, and logistics support for the PATRIOT system components. Geographic impact is primarily within Texas where the contract is performed, supporting local jobs and businesses. Workforce implications include specialized technical roles for maintaining and supporting advanced defense equipment.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits competitive pricing and potentially increases cost to taxpayers.
Long contract duration increases risk of technological obsolescence for the PATRIOT system.
Dependence on a single contractor (Raytheon) for critical defense system sustainment poses a strategic risk.
Lack of transparency in sole-source negotiations can obscure true value for money.

Positive Signals

Firm Fixed Price contract type transfers cost overrun risk to the contractor.
Long-term contract provides stability and predictability for essential defense system sustainment.
Raytheon is a well-established prime contractor with extensive experience in the PATRIOT system.
Delivery order structure under an IDIQ allows for flexibility in tasking and funding.

Sector Analysis

The PATRIOT missile defense system falls within the broader aerospace and defense sector, specifically focusing on air and missile defense. This sector is characterized by high R&D investment, long product lifecycles, and significant government procurement. The market for such advanced defense systems is often concentrated among a few major prime contractors due to the complexity and specialized nature of the technology. Comparable spending benchmarks would involve other major defense sustainment contracts for complex weapon systems, which often run into hundreds of millions or billions of dollars over their lifecycle.

Small Business Impact

This contract does not appear to have a small business set-aside component, as indicated by 'sb: false'. Given the sole-source nature and the likely complexity of the PATRIOT system sustainment, it is improbable that small businesses would be primary awardees. However, Raytheon, as the prime contractor, may engage small businesses as subcontractors for specific components or services, though this is not explicitly detailed in the provided data. The impact on the small business ecosystem would depend on the extent of subcontracting opportunities generated.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of Defense and the Defense Logistics Agency. As a sole-source award, there may be specific justification requirements and review processes. Accountability measures are inherent in the firm fixed-price contract type, which obligates Raytheon to deliver specified services within the agreed price. Transparency is limited due to the sole-source nature, but contract modifications, performance reports, and payment data are typically available through federal procurement databases. Inspector General jurisdiction would apply to any allegations of fraud, waste, or abuse.

Related Government Programs

Missile Defense Systems
Air Defense Systems
Weapon System Sustainment
Logistics and Maintenance Contracts
Defense Prime Contracting
Raytheon Defense Contracts

Risk Flags

Sole-source award
Long contract duration
Potential for cost overruns due to lack of competition
Risk of technological obsolescence
Dependence on a single supplier

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $234.2 million to RAYTHEON COMPANY. PATRIOT PBL REQUIREMENT

Who is the contractor on this award?

The obligated recipient is RAYTHEON COMPANY.

Which agency awarded this contract?

Awarding agency: Department of Defense (Defense Logistics Agency).

What is the total obligated amount?

The obligated amount is $234.2 million.

What is the period of performance?

Start: 2019-01-01. End: 2026-07-31.

What is the historical spending trend for the PATRIOT PBL Requirement with Raytheon Company?

Analyzing historical spending trends for this specific PATRIOT PBL Requirement is challenging with the provided data, as it only presents a single award with a start and end date. To understand historical spending, one would need to examine prior contract awards, modifications, and task orders issued under any preceding or related IDIQ contracts for the PATRIOT system sustainment. This would involve querying federal procurement databases (like FPDS or SAM.gov) for all contracts awarded to Raytheon (or its predecessors) for PATRIOT PBL services over the past decade or more. Such an analysis would reveal if the current $234 million award represents an increase, decrease, or stable level of spending compared to previous periods, and identify any significant fluctuations or trends in investment for this critical capability.

How does the per-unit cost of components or services under this contract compare to industry benchmarks?

Determining a precise per-unit cost benchmark for this contract is not feasible with the provided data. The contract is for a 'PBL REQUIREMENT' (Performance-Based Logistics), which typically bundles a range of sustainment services, spare parts, and support for a complex system like PATRIOT, rather than focusing on discrete, easily quantifiable units. To perform a per-unit cost comparison, one would need detailed breakdowns of the services and parts included, their quantities, and their associated costs within the $234 million award. Subsequently, these would need to be benchmarked against similar PBL contracts for comparable defense systems or against commercial market rates for equivalent services and parts, if available. Given the sole-source nature and the specialized defense context, finding directly comparable public benchmarks is often difficult.

What are the key performance indicators (KPIs) Raytheon is expected to meet under this Performance-Based Logistics (PBL) contract?

Performance-Based Logistics (PBL) contracts, by definition, tie contractor payment and incentives to achieving specific, measurable performance outcomes rather than simply delivering goods or services. While the specific KPIs for this PATRIOT PBL Requirement are not detailed in the provided data, typical KPIs for such contracts often include metrics related to system availability (e.g., percentage of time the system is operational), response times for maintenance and repair, turnaround times for component repairs, inventory levels of critical spare parts, and delivery timeliness of required support. The government would likely have established thresholds for these KPIs, with potential for incentive payments for exceeding them or penalties for failing to meet them. The effectiveness of this contract hinges on the government's ability to define and monitor these KPIs rigorously.

What is Raytheon's track record in delivering sustainment services for complex defense systems like PATRIOT?

Raytheon Company has a long and established track record as a prime contractor for the U.S. Department of Defense, particularly in the realm of advanced defense systems, including the PATRIOT missile defense system. They are the original developer and manufacturer of the PATRIOT system and have been responsible for its sustainment and upgrades for decades. Their experience encompasses a wide range of services, including logistics, maintenance, repair, overhaul, and system integration. While specific performance details for every contract are not publicly available, Raytheon's continued role as the primary provider for such a critical and complex system suggests a generally positive performance history and deep institutional knowledge. However, like any large defense contractor, they may have faced challenges or criticisms on specific contracts over time.

What are the potential risks associated with the long duration (2019-2026) of this contract?

The extended performance period of nearly seven years for this PATRIOT PBL Requirement presents several potential risks. Firstly, technological obsolescence is a significant concern; defense systems evolve rapidly, and components or software developed early in the contract period may become outdated by its end, potentially requiring costly upgrades or replacements. Secondly, requirements creep or changes in military strategy could render aspects of the sustainment support less relevant or necessitate modifications to the scope of work, leading to potential disputes or inefficiencies. Thirdly, long-term sole-source contracts can reduce the incentive for the contractor to innovate or optimize costs over time, as competitive pressure is absent. Finally, economic or geopolitical shifts could impact budget availability or the strategic importance of the system, creating uncertainty.

How does this contract fit into the broader U.S. strategy for air and missile defense?

This contract is integral to the U.S. Department of Defense's strategy for maintaining a robust and ready air and missile defense capability. The PATRIOT system is a cornerstone of this strategy, providing protection against a wide range of aerial threats, including aircraft, cruise missiles, and tactical ballistic missiles. Ensuring the continuous operational readiness and effectiveness of the PATRIOT fleet through Performance-Based Logistics (PBL) sustainment is crucial for national security and the defense of U.S. forces and allies. This contract represents a significant investment in ensuring the long-term viability and performance of a critical defense asset, supporting the overall strategic objective of deterring aggression and responding to emerging threats in the air and missile defense domain.

Industry Classification

NAICS: Manufacturing › Navigational, Measuring, Electromedical, and Control Instruments Manufacturing › Search, Detection, Navigation, Guidance, Aeronautical, and Nautical System and Instrument Manufacturing

Product/Service Code: MAINT, REPAIR, REBUILD EQUIPMENT › MAINT, REPAIR, REBUILD OF EQUIPMENT

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Parent Company: RTX Corp

Address: 350 LOWELL ST, ANDOVER, MA, 01810

Business Categories: Category Business, Corporate Entity Not Tax Exempt, Manufacturer of Goods, Not Designated a Small Business, Special Designations, U.S.-Owned Business

Financial Breakdown

Contract Ceiling: $234,193,298

Exercised Options: $234,193,298

Current Obligation: $234,193,298

Actual Outlays: $132,490,331

Subaward Activity

Number of Subawards: 64

Total Subaward Amount: $18,509,717

Contract Characteristics

Consolidated Contract: Yes

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: YES

Parent Contract

Parent Award PIID: SPRBL115D0017

IDV Type: IDC

Timeline